Just seventeen: corporate social responsibility reporting is still at a formative stage, and British businesses are disclosing differing levels of information in a variety of ways in the absence of mandatory standards. Samuel Idowu and Brian Towler study a stream of conscientiousness from 17 companies to compare how and what they report.
In a recent study, we telephoned 30 companies with registered offices in the UK. Only 17 of them responded to our request for their latest CSR reports. From these, we noted that there were two distinct reporting practices. Seven of the firms issued a stand-alone document and the other 10 simply devoted a section of their main annual report and accounts to CSR (see table, page 27). Our analysis of each firm's disclosures is summarised as follows.
The construction company has a stand-alone report of 40 pages divided into sections covering topics such as sustainability, health and safety, the environment and social issues.
It identifies 17 milestones that the group reached last year and a number of goals for 2003. Six of its operating companies achieved level four in the Royal Society for the Prevention of Accidents audit scheme (level five is the best). There were six fatalities across the group in 2002--one more than in file previous year--although safety training has been stepped up.
Balfour Beatty is listed on the Business in the Environment Index and several of its operating companies are now ISO14001-certified. The report states that the group is making more effort to ensure that it identifies all stakeholders and fulfils its responsibilities to them.
The bank's stand-alone report, which has been verified by SGS, an independent specialist in ethical auditing, starts by listing its 10 key CSR achievements in 2002. For instance, Barclays became the first UK bank to receive ISO14001 environmental certification; it set up a global diversity council to ensure equal opportunities in its operations worldwide; it offered employees in Botswana and Zambia free confidential HIV/Aids testing; and it reduced its carbon dioxide emissions by 10.2 per cent in the UK.
Barclays has a director whose key responsibility is CSR. The bank is included in a number of external indices of responsible companies, including the Dow Jones Sustainability index, the Stoxx Sustainability index and FTSE4Good. It subscribes to the principles enshrined in the UN's universal declaration on human rights and the International Labour Organisatinn's conventions on minimum working age, health and safety, working hours and discrimination.
The utilities giant includes its CSR disclosures within the annual accounts. It divides these into four sections: business principles; health, safety, security and the environment; HR management; and community involvement.
During 2002 BG received ISO14001 certification for its operations in Bolivia, Brazil, Egypt., Ireland, Northern Ireland, Trinidad & Tobago and the US (Phoenix, Arizona).
The report states that the group makes voluntary and contractual contributions to the communities it supplies, sponsors local groups and runs employee involvement programmes. BG operates a payroll giving scheme and also undertakes social impact assessments, develops community relationships and contributes to sustainable development programmes. The BG Energy Challenge, for instance, has raised more than 1 million [pounds sterling] for charities since its inception in 1996, and the company is also a member of Care International UK, a global humanitarian aid organisation.
Bradford and Bingley
The former building society devotes a three-page section in its annual report and accounts to CSR. This states that the company has adopted the Forge Group framework for CSR management and reporting for the financial services sector, as recommended by the British Bankers' Association.
Bradford and Bingley is a member of the London Benchmarking Group, which measures members' investments in the community using a consistent model, and of Business in the Community, a national not-for-profit organisation that supports social and economic regeneration. The firm discloses that in 2002 it invested over 1 million [pounds sterling] in the community. Its programme has been ranked 45th in the FTSE 100 by the Guardian. The investments covered four main areas:
* Teaching personal finance and numeracy in schools. It works with Education Extra, an out-of-school-hours learning charity.
* Preventing and alleviating the causes of homelessness. The company is the sponsor of Shelterline, the UK's first 24-hour, free, national housing helpline.
* Improving disabled people's access to financial services, working with the RNIB and the RNID. It is also a member of the Employers' Forum on Disability.
* Working on social regeneration projects with housing associations.
Bradford and Bingley entered the Business in the Environment index for the first time in 2002, but it ranked 169th out of 192 companies listed, which has helped it to identify the structure needed to improve its procedures.
The company supports the UN universal declaration of human rights in the workplace and is a member of Opportunity Now and Race for Opportunity, which promote diversity at work. Out of nine board directors, two are women. More than a third of management roles in the company are occupied by women.
The bank discloses that during 2002 it introduced a range of ethical investment products. It also developed a formal system for evaluating its occupational health and safety profile.
The energy supplier includes a report under the "Corporate responsibility" heading within its annual report and accounts. This states that corporate responsibility is integral to all of the company's activities. To this end, Centrica formed a corporate responsibility committee in 2002 to set up a CSR framework.
The company was included in the 2002 FTSE4Good index and in the Dow Jones Sustainability index for 2003. The report states that corporate responsibility concerns have been fully integrated into the group's risk management structures. These address the financial impact on the business of social and environmental threats, as well as the potential impact on the reputation of its brands.
The pensions firm, which has a director who is responsible for CSR, supplied two documents. The first was its latest annual report, which contained three pages on CSR. The second was a simplified 12-page version of the report, which contained a four-page section on CSR.
Friends Provident is a member of Business in the Community and in 2001 it entered the FTSE4Good index. In 2002 it set 13 CSR-related targets and hit 10 of them. Sixteen have been set for 2003. It has a scheme to advise staff on ways to conserve the environment. It is also a supporter of the UN environment programme.
The firm discloses that it has negotiated contracts to receive most of its electricity from renewable sources for the next two years and has introduced a campaign to reduce interoffice travel. Staff cut down on business travel whenever possible by using video and teleconferencing, and LPG-powered vehicles have been brought into the company car fleet.
Friends Provident has a policy of investing premiums from policyholders ethically. To help bring about positive changes in the companies it invests in, it has devised a programme called responsible engagement overlay (REO). Under REO the firm has a team of experts who advise companies on issues such as the environment, labour standards and human rights. The firm applies REd to nearly all the equity investments made on behalf of life and pensions business customers. As a major shareholder in many companies, Friends Provident uses its votes to encourage them to adopt effective corporate governance. In 2002 it launched the stewardship international fund, which invests in global markets whose operations make a positive contribution to society.
On the community involvement side, the firm partners Barnado's in a citizenship scheme aimed at 11- to 14-year-olds called Future Citizens. Staff are also given time to visit primary schools to help pupils develop their reading skills. And, through its sponsorship of Southampton Football Club, Friends Provident has backed an initiative in collaboration with Southampton City Council to "kick racism out of football".
The Hull-based telecoms firm's CSR statement takes up one page of its 2003 annual report, under the heading "Environmental, community, social and ethical policies".
Kingston Communications discloses that it has been listed in the FTSE4Good index since 2001 and has recently developed a formal environmental management process in line with the ISO14001 standard. It has set targets on the environmentally friendly disposal of printer cartridges etc and the recycling of equipment that can't be economically reused.
The firm states that it is embedding a culture of health and safety with intensive training. Improved accident and "near miss" reporting procedures have also been adopted. The total loss of working time owing to all causes of sickness, injury or disability was 13,204 days or 2.35 per cent of the year's total working time.
During the year the firm has helped employees to become school governors, released staff during working hours to participate in Hull's Children's University and opened the Kingston Communications Stadium, now home to the city's football and rugby league clubs.
The football club, which devotes four pages to CSR in its annual report and accounts, states that in 2001 it was selected for inclusion in the FTSE4Good index. It is also the only football club so far to have taken part in the annual index of corporate environmental engagement compiled by Business in the Environment. It reports that its inclusion in these indexes resulted from its publication of policies on health and safety, equal opportunities and environmental management. The company has a director who has responsibility for environmental issues.
Manchester United states that it will recycle waste materials wherever possible and use recycled products and packaging. It will also minimise its use of non-renewable materials and reduce its energy consumption.
The company discloses that the Football in the Community scheme it runs has provided coaching for more than 100,000 participants in 2001 and 2002. It runs after-school sessions, holiday courses, junior clubs mad competitions for grass-roots players. The Manchester United Study Centre, which opened in 2000, aims to help pupils from local schools improve their literacy, numeracy and IT skills.
The club has an initial three-year commitment to raise 1 million [pounds sterling] for Unicef and to increase awareness of the problems faced by children around the world. Other charities it supports include Childline, Guide Dogs for the Blind, Marie Curie Cancer Care and Mencap.
The mobile network provider's CSR activities are disclosed in its 2003 annual review. It has also published its independently verified CSR report for 2003 in print and on-line.
The company states that it has made three remarkable achievements in this area over the year. It established a corporate responsibility advisory council, launched its "Can do in the community" programme and reviewed its approach to diversity and human rights, publishing new policies on the environment and ethical procurement.
The firm is now represented in some of the main sustainability indexes and funds. These include FTSE4Good, the Dow Jones Sustainability index and Business in the Community's Corporate Responsibility index. It has had corporate registration under ISO14001 since 2000 and it endorses the disclosure guidelines on social responsibility set out by the Association of British Insurers.
Charitable causes were awarded a total of 444,000 [pounds sterling] over the year by mm02, which states that it is committed to ethical procurement, health and safety in both the workplace and the communities it serves.
The energy delivery company, which has a director who is responsible for CSR issues, includes a section in its annual report entitled "Operating responsibly". This states that the firm recognises that, as one of the world's largest utilities businesses, it must operate under a framework built on three goals: "sustainable growth", "profits with responsibility" and "investing in the future".
In the past year 269 employees took time off work as a result of accidents, although there were no fatalities. There was no prosecution for an environmental offence in the financial year and several of the group's operating companies in the US and UK gained ISO14001 certification. National Grid Transco was also one of the 18 firms placed in the premier league of Business in the Community's seventh Corporate Environmental Engagement index.
The report acknowledges that the organisation has a diverse range of stakeholders, with whom it strives to be open an d constructive.
The food producer devotes three pages to its CSR activities in its annual report. It states that the group's rating in Business in Community's seventh Corporate Environmental Engagement index showed a 17 per cent improvement on its performance in the previous year. It also met the energy-efficiency target required by the climate-change levy at all of its qualifying sites. This means that the company will continue to qualify for a levy discount until at least 2005.
The statement discloses that the company continues to meet all the requirements of the Producer Responsibility Obligations (Packaging Waste) Regulations 1997 and efforts are being made install alternatives to landfill for the disposal of biodegradable food waste. In addition, it has conducted pilot composting and anaerobic digestion projects.
Northern Foods is working towards monitoring the ethical standards of its suppliers and collaborating with other parts of the supply chain to ensure that monitoring is done efficiently and to the appropriate standards.
Through the Northern Foods social responsibility committee, charitable donations of 266,000 [pounds sterling] were made in the year to 31 March 2003. The group gave money to 29 charities, including Farm Africa, Oxfam and the Samaritans. It gives time off to graduate trainee managers to spend two weeks on assignment with a local community organisation. Many of its other employees are active in their local communities in roles such ms mentors, trustees and fundraisers.
The group discloses that many of its operating companies won various health and safety awards during year. Pennine Foods, Walter Hollands and Palethorpes all received gold awards from the Royal Society for the Prevention of Accidents. And Elkes Biscuits won an award from the Health and Safety Executive for its activities in support of European Week of Safety and Health in October 2002.
The bank has a stand-alone CSR report and also devotes three pages to these activities in its annual report. It states that its biggest contribution to the community is the donation of 5 per cent of its pre-tax profit to the Northern Rock Foundation, which makes grants to disadvantaged people and charities based primarily in the north-east of England.
Five per cent of its pre-tax profit in 2002 amounted to 16.3 million [pounds sterling], which will bring its total donation to the foundation since its incorporation in 1997 to 86.5 million [pounds sterling].
Northern Rock reuses, recycles or, wherever possible, reduces its waste; considers environmental issues in its purchasing and lending policies; invests in environmental projects that benefit local communities; and seeks to monitor and cut its energy consumption. These policies have led to the bank's inclusion on the indexes of bodies including Business in the Community, FTSE4Good and the National Energy Foundation.
Royal Bank of Scotland
"Make it happen" is the theme of the bank's 36-page stand-alone CSR report. The company sees itself as adding value for both customers and staff, conducting all its operations responsibly, bringing benefits to the wider community and seeking to set and maintain ever higher standards. The report set out how the bank has worked--and intends to continue working--towards achieving these objectives.
A deficiency in this, the bank's first CSR report, is its failure to disclose company policy on ethical lending. But the group chief executive does indicate in his foreword the bank's intention to comply fully with the relevant legislative and regulatory frameworks. He notes that the bank has implemented a range of initiatives that will ensure that its business is conducted in a sustainable way.
The supermarket chain has no stand-alone CSR report, although it does have a director who is responsible for CSR issues and has published on its website a comprehensive review of how it is meeting its social responsibilities. The firm acknowledges that the needs of all its stakeholders sometimes conflict, but points out that these must be met and it has a duty to show how it's trying to meet them.
The Safely and Environmental Risk Management Agency, an independent firm that makes strategic assessments of companies' safety, environmental and social risk exposure in financial terms, gave Safeway an AA+ rating in 2002, the highest in its industry. Safeway is also listed on the Dow Jones Sustainability and FTSE4Good indexes.
The report discloses that, as part of the company's commitment to greater transparency, it will continue to improve the quality of information produced to support its CSR strategy.
Tim oil giant's 49-page CSR report predicts that the world's energy use will double by 2050. This increase in demand will centre on the developing world, but the industrialised countries' consumption will continue unabated.
The document states that Shell faces the "daunting challenge" of how to satisfy these needs without damaging people's health, blighting local environments and threatening vital ecosystems. It shows how the company is working with governments, local communities and industry partners to deal with what it calls "hot spot" sites, and how it is contributing to sustainable development.
Three pages are devoted to Shell's contributions to "social performance" in Nigeria and two pages cover similar activities in China.
The supermarket chain's 32-page stand-alone CSR report states that each year its CSR group sets key performance indicators (KPIs) for the company to achieve in a financial period. It lists 17 KPIs that Tesco intended to meet in 2001-02. These are under headings including energy efficiency; recycling; biodiversity; Business in the Environment; Business in the Community; education support; local sourcing; and labour standards in the supply chain.
For each KPI it states four performance levels: "under development", "on track", "completed" and "exceeded expectations". Eight out of the 17 indicators are on track, eight are completed and one has exceeded expectations.
The last section of the report compares how Tesco has performed in 10 of these KPIs over different periods. From the bar charts it provides, it's clear that the company has steadily improved in all of them.
The petrochemicals company includes a section on CSR in its annual report. It states that Tullow Oil recognises that constant vigilance over environmental, health and safety (EHS) issues are paramount. As a result, the firm is committed to developing procedures that allow it to manage risk. For example, this year it collaborated with a local seismic-survey firm contracted to its operations in Bangladesh to develop an EHS management system.
Tullow Oil breaks its social performance down into three areas: behaviour (following EHS and welfare policies); impact (how well it manages the effect of its operations on people); and its overall contribution to society, including support for charities. The firm is in the process of formalising its existing activities into a structured CSR strategy.
Lastly, it discloses that the firm continues to support local communities in the UK, Ireland and Pakistan through its contributions to health programmes, the provision of water supplies and work on educational projects.
In general, CSR reporting is still in its development stage and disclosure practices are very basic. From the 17 reports we analysed, however, we have found that they can he extremely sophisticated too. The government has set some remarkable examples in encouraging firms to participate in this area. For instance, the Department of Trade and Industry (www.societyandbusiness.gov.uk) has had a minister for CSR since 2000, and businesses are following its lead and appointing individual board member stotake charge of CSR.
CSR MEASURES COMPARED Organisation Issues a Has director FTSE4Good standalone responsible index listing CSR report for CSR Balfour Beatty [check] [check] x Barclays Bank [check] [check] [check] BG Group x x x Bradford x [check] x and Bingley Centrica x [check] [check] Friends Provident [check] [check] [check] Kingston x x [check] Communications Manchester Utd x [check] [check] mm02 x [check] [check] National x [check] x Grid Transco Northern Foods x [check] x Northern Rock [check] [check] [check] Royal Bank [check] [check] x of Scotland Safeway x [check] [check] Shell Group [check] [check] x Tesco [check] [check] x Tullow Oil x x x Organisation Business in Dow Jones IS014001 the Community Sustainability index listing index listing Balfour Beatty [check] [check] [check] Barclays Bank [check] [check] [check] BG Group x x [check] Bradford [check] x x and Bingley Centrica [check] [check] [check] Friends Provident [check] x x Kingston [check] x [check] Communications Manchester Utd [check] x [check] mm02 [check] [check] [check] National [check] x [check] Grid Transco Northern Foods [check] x x Northern Rock [check] x [check] Royal Bank [check] [check] [check] of Scotland Safeway x [check] [check] Shell Group [check] x x Tesco [check] x x Tullow Oil x x x Organisation Supports Sets annual Has website named CSR targets dedicated charities to CSR Balfour Beatty x [check] x Barclays Bank [check] [check] [check] BG Group [check] [check] x Bradford [check] [check] x and Bingley Centrica [check] [check] x Friends Provident [check] [check] [check] Kingston [check] [check] x Communications Manchester Utd [check] [check] x mm02 [check] [check] [check] National [check] [check] [check] Grid Transco Northern Foods [check] [check] x Northern Rock [check] [check] [check] Royal Bank [check] [check] [check] of Scotland Safeway x [check] [check] Shell Group [check] [check] x Tesco x [check] x Tullow Oil [check] [check] x
Samuel Idowu is a senior lecturer in the department of accounting, banking and financial systems at London Metropolitan University. Brian Towler is a lecturer in the department of business and professional studies at Guildford College
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|Title Annotation:||Business Corporate Social Responsibility|
|Author:||Idowu, Samuel; Towler, Brian|
|Publication:||Financial Management (UK)|
|Date:||Dec 1, 2003|
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